Week Ended November 23, 2012

Stocks rise on policy optimism

Stocks reversed course following two weeks of losses and scored strong gains on hopes that policymakers in both Europe and the U.S. might be making progress on overcoming the regions' economic hurdles. Positive economic data in China and the U.S. also boosted sentiment.

Major indexes enjoy biggest one-day rally in two months

On Monday, the major indexes recorded their strongest session gains in over two months. Investors appeared to be encouraged by signals over the weekend that the Obama administration and Republican leaders in the House of Representatives would be open to a deal to avoid the year-end "fiscal cliff" of scheduled federal spending cuts and tax increases.

European markets rise on hopes for Greek aid

Progress in European debt negotiations was also encouraging. Although closed on Thursday for the holiday, U.S. markets followed European shares sharply higher when they reopened on Friday on news that Greece and the International Monetary Fund might be nearing agreement on the conditions for Greece's next installment of aid.

Housing rebound drives homebuilder stocks higher

The week's economic data, particularly in the housing sector, also appeared to give a boost to stocks. Existing home sales rose more than expected in October, and a gauge of homebuilder confidence reached its highest level in over six years. Homebuilder stocks rose sharply following the news, as did stocks of suppliers to the industry.

Is China's slowdown bottoming?

Finally, signs that China's slowdown might be easing also improved sentiment. Data indicated that China's manufacturing sector is expanding for the first time in over a year. Global investors have been keeping a close eye on China given the country's once-in-a-decade change in leadership and how that could affect economic policy in the world's second-largest economy. T. Rowe Price's Hong Kong-based portfolio managers are optimistic that China will engineer a gradual deceleration as it shifts to an economy driven by domestic consumption from one driven by exports and fixed asset investment.

U.S. Stocks1

Index2

Friday's Close

Week's Change

% Change
Year-to-Date

DJIA

13009.68

421.37

6.48%

S&P 500

1409.15

49.27

12.05%

NASDAQ Composite

2966.85

113.72

13.88%

S&P MidCap 400

987.91

35.23

12.33%

Russell 2000

805.32

28.56

8.72%

This chart is for illustrative purposes only and does not represent the performance of any specific security. Past performance cannot guarantee future results.

1Source of data Reuters, obtained through Yahoo! Finance Closing data as of 1 p.m. ET.

2The Dow Jones Industrial Average and the Standard & Poor's 500 Stock Index of blue chip stocks, the Standard & Poor's MidCap 400 Index, and the Russell 2000 Index are unmanaged indexes representing various segments by market capitalization of the U.S. equity markets. The Nasdaq Composite is an unmanaged index representing the companies traded on the Nasdaq stock market and the National Market System.